Economic Outlook: How to rappel off cliff

There are 21 shopping days until Christmas and 27 days until the U.S. budget goes, potentially, over a fiscal cliff for lack of leadership in Washington.

This is the time in Washington to wield the power of a two-term presidency, which is to say Barack Obama has all the tenure he's ever going to get at this point. It's time to move the bar higher -- way higher.

The budget debate at this point can set the tone for future budgets, but it cannot and should not attempt to solve the U.S. deficit problem. That is a very flawed concept as most folks know -- hence the name fiscal cliff and the frantic efforts to avoid it.

That said, the last thing a politician wants to do, apparently, is roll back campaign pledges, no matter the circumstances.

Ouch. One could lose a job over this. Therefore, only Obama can take the high road here. And he appears to know it, having sent out a steady series of signals of willingness to compromise.

Here are some compromises that are necessary: If Republicans want to close tax loopholes and pretend that isn't technically raising taxes, be our guest.

Secondly, there just are not and never have been enough darn rich folks, after all.

No, they are not holy, iconic, untouchable or any of the above -- but even taxing the top 2 percent of the country's 100 percent of their earnings simply does not touch the budget deficit seriously enough. So, let's switch the terminology a bit. As wealthy is the new untenable, let's call the top 2 percent in earnings not rich, but successful.

Is that too hard to understand? We need successful people in a free enterprise system. Given the belligerence of Washington Republicans -- and that belligerence is how the checks and balances system is supposed to work -- then take the opportunity to close every loophole and leave the tax rates alone.

That is, after all, a progressive position, given wealthy individuals use tax loopholes far more often than wage earners who are scrambling.

Let's move on to the real budget problems. There are serious issues that are not even on the table at this point.

First: An economic recovery is one masterful way to raise tax revenues. Therefore, as this is where the rubber meets the road, the budget deficit can best be solved by reducing the country's $600 billion annual trade deficit.

The deficit can be best served by moving toward energy self-sufficiency. Those plug-in electric cars: Brilliant. Those solar panel businesses: Just right. Increased oil and gas production -- the sooner the better.

With no more elections to face, President Obama should be confronting rising medical care costs and the nation's retirement age, which should be raised to re-balance the equation on the nation's costly pension plans.

The so-called fiscal cliff is a serious problem, but it is also a smokescreen. No matter how it is resolved, this is one of those issues in which, as soon as it is tucked away, everyone will say, "Now the hard work begins."

If you think the fiscal cliff is scary, stick around. A $16 trillion and counting deficit isn't going away because lawmakers tweaked the tax code with adjustments that add up to less than $500 billion, which is the current size of the fiscal cliff -- the cliff that is so tall it could push the country into recession No. 2.

In international markets the Nikkei 225 index in Japan slipped 0.27 percent, while the Shanghai composite index in China added 0.78 percent. The Hang Seng index in Hong Kong was flat, rising 0.15 percent, while the Sensex in India rose 0.22 percent.

The S&P/ASX 200 in Australia shed 0.62 percent.

In midday trading in Europe, the FTSE 100 index in Britain was off 0.05 percent, while the DAX 30 in Germany moved little, up 0.05 percent. The CAC 40 in France added 0.49 percent, while the Stoxx Europe 600 gained 0.07 percent.

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